Health insurance is not just a safety net in India, but is also seen as an essential part of an individual’s financial planning journey. With rising medical costs and an increasing awareness of health risks, more individuals and families are recognising the need for reliable health cover.

Adding to its growing significance is the option of portability, a crucial feature that empowers policyholders to switch between insurers without losing the existing policy benefits. But how exactly does health insurance work in India? How do you make claims and renew your policy? Keep reading to learn more.

How Does Health Insurance Work?

Health insurance can feel rather complex at first glance, but it works on a basic mechanism. You pay a premium to an insurance company in exchange for coverage that helps you manage the costs of medical treatments. When you need to, you can then make a claim to receive financial support for your healthcare expenses.

Here are some key components to help you understand how health insurance works:

• Premium: This is the amount that you have to pay, either quarterly, monthly, or annually, to keep your health insurance policy active. Think of it as a membership fee that ensures you are financially protected in case of unexpected medical needs. Every insurance plan has a different premium depending on the type you have selected.
• Coverage: This refers to the range of healthcare services and expenses that your insurance policy will pay for. Coverage differs for every plan, and depending on what you have selected, this can include hospitalisation, surgeries, medicines, doctor consultations, and more.
• Claims: Claims can be made when you require any medical treatment. You or the hospital can file a claim with your insurer. There are two ways to make a claim, which we will discuss in depth in the next section.
• Sum Insured: This is the maximum amount your insurer will pay in a policy year. For example, if your sum insured is ₹5 lakh, the insurance company will cover medical expenses up to that limit.
• Pre-Existing Disease Waiting Period: If you have existing health conditions like diabetes or hypertension when you buy your policy, you usually cannot claim for treatments related to these conditions immediately. There is a waiting period, which is often two to four years, before coverage kicks in.
• Network Hospitals: Insurers partner with specific hospitals where you can enjoy cashless treatment. This means you do not have to pay upfront, the hospital settles your bill directly with the insurance company.

How Health Insurance Claims Work

Knowing how to make health insurance claims is necessary to make the entire process less stressful.

1. Cashless Facility

   A cashless claim facility allows you to receive medical treatment at a network hospital without paying the bills out of your own pocket. Here, the insurance company settles the medical expenses directly with the hospital, based on the coverage outlined in your policy.

   To use this facility:
   • You need to get admitted to a hospital that is part of your insurer’s network.
   • You will also be required to show your health insurance card and fill in a pre-authorisation form, ideally before admission, unless it is an emergency.
   • Once the insurer approves the request, your treatment proceeds without the burden of immediate payment.

   It is important to remember that only the costs covered by your policy will be paid by the insurer. Any non-covered expenses must still be borne by you.

2. Reimbursement Facility

   The reimbursement option gives you the freedom to seek treatment at any hospital, regardless of whether it is part of the insurer’s network.

   • In this case, you will initially pay all the medical expenses out of your own funds.
   • Once you are discharged, you can file a claim with your insurance company by submitting all the necessary documents, such as hospital bills, medical reports, prescriptions, and discharge summaries.
   • After reviewing and verifying the documents, the insurer will reimburse you for the eligible expenses as per the terms of your policy.

   Please note that it is crucial to maintain all bills and paperwork carefully, as missing documents can delay or even jeopardise your claim.

How Does Health Insurance Renewal Work?

The health insurance renewal process gives you a chance to reassess your protection, strengthen your plan if needed, and avoid any gaps in coverage that could cause trouble later on.

If you are wondering exactly how the health insurance renewal process works, here’s a simple step-by-step guide to help you through it:

• Step 1: Understand Your Policy Term

  In India, most policies are valid for one year. As your policy nears its expiry date, it is necessary to renew it to maintain continuous coverage and preserve accumulated benefits such as the no-claim bonus.

• Step 2: Watch Out for Renewal Reminders

  Insurers usually send reminders via SMS, email, or post well before your policy expires. These reminders are crucial, as missing your renewal could result in a policy lapse, requiring you to undergo fresh waiting periods for pre-existing diseases.

• Step 3: Review Your Health and Coverage Needs

  During renewal, assess whether your existing coverage is sufficient. You might need to increase your sum insured, add family members under a family floater plan, or opt for additional covers like maternity benefits, critical illness protection, or top-up plans.

• Step 4: Choose to Renew or Port Your Policy

  If you are satisfied with your insurer and the services provided, you can simply renew. However, if you believe another insurer offers better benefits, the Insurance Regulatory and Development Authority of India (IRDAI) allows you to port your policy at renewal time without losing accumulated benefits such as waiting period credits.

• Step 5: Pay the Renewal Premium

  To successfully renew your policy, pay the premium before the due date. Most insurers offer easy online payment facilities. In India, a grace period of 15 to 30 days is generally provided after expiry to renew your policy, but note, you cannot raise any claims during this grace period.

• Step 6: Receive Updated Policy Documents

  Upon successful renewal, your insurer will issue updated documents, including the revised policy schedule and payment receipt. Ensure you store these safely, as they are essential for future claims or tax benefits under Section 80D of the Income Tax Act.

When Should You Get Health Insurance?

Securing health insurance is one of the most responsible decisions you can make for yourself and for those who depend on you. But when exactly should you get it?

• Offered by the Employer: It is advisable to accept the health insurance provided by your employer. Such plans are often more affordable and offer broader coverage than individual policies.
• Have a Family: Consider the potential financial burden of medical expenses without insurance. Having coverage ensures that your family is protected against unexpected healthcare costs.
• Unable to Pay for an Illness or Injury: Health insurance is essential if covering sudden medical expenses would place a strain on your finances. It provides peace of mind and financial security during unforeseen health emergencies.
• Want Coverage for Serious Accidents: Even if you are generally healthy, having insurance in place for major accidents ensures you are not left with overwhelming bills after an unexpected event.
• Are Between Jobs: It is important to maintain continuous health coverage even when you are not employed. Short-term or temporary insurance plans can help bridge the gap until you secure new employment.

FAQs:

1. How do health insurance premiums work?

   Health insurance premiums are fixed payments made monthly or annually to maintain your policy. The amount depends on factors such as your age, coverage type, sum insured, and medical history.

2. How does the annual deductible work in health insurance?

   An annual deductible is the amount you must pay out of pocket each year before your insurer begins covering expenses. For instance, with a ₹10,000 deductible, you pay this amount first, then your insurer covers costs according to the policy.

3. How does co-insurance work for health insurance?

   Co-insurance is the percentage of medical costs you pay after meeting your deductible. For example, if your co-insurance rate is 20%, you pay 20% of the bill, and your insurer covers the remaining 80%.

4. How does dual health insurance work?

   Dual health insurance means having two active policies, one through your employer and another through a personal plan. You can claim under one, and if expenses exceed that, use the second policy, as per the coordination of benefits rules.

5. How does employer health insurance work?

   Employer health insurance is a group plan offered by your workplace, where the employer typically covers part or all of the premium. It usually includes the employee and may extend to family members, depending on the policy.

6. How does a no-claim bonus work in health insurance?

   A no-claim bonus is a reward for not raising any claims during the policy year. It often increases your sum insured or offers a discount on your premium at renewal, without extra cost.

7. How does travel health insurance work?

   Travel health insurance covers medical emergencies, hospitalisation, and other health-related incidents while you are travelling abroad. It typically includes sudden illnesses, accidents, and medical evacuations.

8. How does group health insurance work?

   Group health insurance provides coverage for a group, often employees of a company, under a single policy. It usually offers lower premiums than individual plans, with standardised coverage for all members.